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There's a lot you don't know. That's why the agents here, myself included, hammer you so hard for spreading misinformation to the public. Yes, in most states the buyer can receive a rebate from the agent. And no, you don't need an agreement from the sellers broker. The buyers broker is free to do with the commission whatever they wish.
I'm just a normal consumer. Always happy to be corrected if i say something wrong and my point is directly addressed. I knew that admitting i didn't know something would make everyone giddy. Anyway, I missed the point that this would be done as a rebate but as you say, not legal in all states (which DOJ is keen to change as restricting rebates inhibits competition). But you're correct that most states allow - 10 don't, per quick look.
Well yes, if the agent is going to have a ceiling it's also fair to have a floor - don't you think? I'm not arguing the floor and that should have been clear from what I said. I'm saying if I'm taking the risk in any shortfall if there is a floor, I need to know the shortfall amounts early in the game so that I have a full view of the costs and can compare each choice. That was the point.
You can already have that. All you need to do is ask the agent what the co-broke is and if there are bonuses. It's all black and white right there on MLS.
I don't have access to MLS, do I? If there are 15 homes in my price range and location and size requirements, will the agent provide the incentives (commission and bonus, including conditions for getting the bonus for each, just as they might list the price, sq footage, number of bathrooms. It's all right in the MLS as you say so providing this info is not rocket science. If it's already commonly done like this then please confirm this is the case.
First of all bonuses and higher commissions aren't all that common, but if there is a bonus why would it be excluded? Pay is pay whether they choose to call it a co-broke or a bonus. It's all commissions.
Yes, agree that pay is pay. Again, read and understand the context. I was responding to the suggestion to stipulate the agent's pay in the buyer's agreement. My point was very clear that handling bonuses in this would be awkward, for example, if agent gets a 10k bonus for selling 5 houses in that development. How would you assign value of that bonus in this deal if you considered bonuses and commission together in say an agreement that the agent gets 2.8%? Anyway, that detail is not very interesting other than to suggest that it's easier to provide a transparent view of incentives for each house as stated above.
There's no deep, dark, secret co-broke or incentive structure. You sign an agency outlining pay structure. Commission is listed as the co-broke on MLS or if it's a builder they usually list all payments in the contract of sale, or an addendum, and they show up on the settlement statement for both resales and new construction. It's incredibly transparent. Why do you think it isn't transparent?
When looking at houses in the market, the incentives for your agent are not transparent for each. That's my point and I was clear that knowing the incentives for one house when you make an offer is not good enough. You respond by saying that it's all clear in the settlement statement and contracts! You can disagree but you've not responded to the point. Transparency is knowing up front, not at the time of offer for one house only and certainly not at the time of closing.
Sorry this is semi random. You would prefer we use the color of the loo in the second bath?
In fact annoying the agent is probably a dumb thing for a seller to do.
But none of this list selection deals with anything other than the need of the client. You cannot get to bias by the order in which presented. If you are sitting there with 127 homes which meet the buyer's spec do you really believe their is some magic formula the agent must use to sort it down. In my view you use your best judgement to pick the set they will buy. Does the commission have an impact? Perhaps. Bdut so does the pink front door.
Big difference. "Pink front door" or the color of the loo is a factor that is related to your client's interest. You have no stake in his door color. If you exclude a house based on these factors you can easily explain/defend it as you didn't think he would like it based on your understanding of his preferences and needs. Doesn't mean you always get it right but as long as you can put reasoning behind it, that sounds OK as you were acting reasonably to look after his interest.
The commission incentive is your interest, not your clients. If you exclude or are dismissive of a home based on your commission (i.e. your interest), that's a completely different thing. Buyer's agents need to make their living earning commission but at the same time they are legally bound to act in their client's interests, over their own. Fundamental conflict of interest is inherent in this system. If a client could demonstrate that this excluded house was more aligned with his interests (e.g. cheaper and meets more of the requirements that he gave to you) then couldn't there be a strong claim that his interests were not properly looked after?
Your thinking that factors of the client's interest and factors of your own interest are the same is very problematic. In order to look after someone's interests as a fiduciary, you need the capacity to understand and separate your own interests from his. To properly fulfill requirements as a fiduciary, agents (or anyone) need to understand the basics of this stuff and be able to converse on it.
The text Mike J. quoted is not the best written paragraph in the world. It's from NAR not from Shakespeare though. Focus on the first few words of the quote:
Multiple listing services shall not publish listings that do not include an offer of compensation
The rest of the paragraph really just goes over how the offer of compensation must be expressed. An offer of 0% compensation is an offer of no compensation and therefore not an offer of compensation. Therefore, a violation of MLS rules.
I explained my logic for interpreting it the way that I did but if your reasoning is that you can just slice off part of a sentence, then I would be concerned if you deal with contracts.
It's like saying
Motorists are not allowed to drive under the influence of alcohol
can be understood as
Motorists are not allowed to drive
!!!
Anyway, you're a Realtor and a member of the NAR (I am not) so I accept that you can represent the rules of the industry/NAR and I cannot. My own personal interpretations and understanding doesn't matter in the end. Yours do matter as you are the one able to advise the public on things like this.
So to clarify, are you saying that if a consumer, for example, wishes to get his home visible in the MLS (and on Realtor.com, etc) and he pays a Realtor as 'MLS entry only', he still cannot be in the MLS unless he also agrees to pay buyer's agent commission? Might sound like a trivial point but from a market competition perspective, I do not think it is.
That sounds anti-competitive to me. I thought that competition over rates was a key principle of MLS so just like it would be problematic (in my view) if the NAR or any group of agents said all buyer's agent rates must be 3%, surely by this principle it would also be problematic to say that rates must be in a certain range, or in fact say that they can't be zero? In open and free markets when competition dictates that an aspect of a service is free, competitors cannot agree amongs themselves that all will charge for it. If market forces dictate (as they do) that restaurants do not charge customers for using the bathroom, if the restaurant industry association were to make a rule that member restaurants must charge customers for using the bathroom, then this could be seen as criminal anti-competitive behavior (just in my unlearned layman's opinion). While the market forces for buyer's commission suggest that 0% offer is not going to be competitive, clearly there should be no restriction on someone offering this rate.
This doesn't sound right to me so are you sure about this? Sure enough to be making this representation as a Realtor on a public forum where consumers may be relying on this information? It could be serious if they are led to believe they are required to pay for something if they aren't. I'm not trying to be antagonistic but rather just trying to make sure there is no misinformation for consumers and that you can stand by it when you say that an offer of a 0% buyer's commission would violate NAR's MLS rules.
"Built by hand" is just a figure of speech. If the owner turns out to be one of the better builders of homes, buyers would love it.
I've remodeled a few of my rentals and while I used contractors for some of the work I know I have done a better job than most contractors out there for the work I did.
I don't want to **** anybody here, but... Houses in my area sell for about 1M. Agent commission is 3%. What are they doing that worth 30,000$, a yearly salary of a lot of people? Showing the house? Making some phone calls to mortgage/escrow/owner/buyer? Send template docs with entered details for docusign?
30,000???
I love seeing the layman in here offering their perspective, but as 2bindenver, Brandon Hoffman, Mike and Mike (and others) point out, please take into account how many times these posts are read. People usually flee to the www as a starting point when they have a very real or serious challenge. Some of the information you offer on CD real estate (in multiple threads) comes across as authoritative, when in fact, it's dead wrong. Readers here are trying to decide their next move in a situation that almost always involves financial commitment. I do encourage you to read and participate and continue to learn; my post is not intended to push you off. But please use extreme caution. As much as we constantly cite our advice is never to be a substitute legal advice, many do just this and have taken a legal shortcut (as I have been horrified to find out after the fact).
I don't want to **** anybody here, but... Houses in my area sell for about 1M. Agent commission is 3%. What are they doing that worth 30,000$, a yearly salary of a lot of people? Showing the house? Making some phone calls to mortgage/escrow/owner/buyer? Send template docs with entered details for docusign?
30,000???
first, you believe that folks in $1MM homes make only $30K? Something is amiss here.
If those are the only services that you want from your real estate professional, then you should have no issue negotiating the compensation downward.
Otherwise, the services typically provided, and why for one house the compensation may be larger than another have been hashed and rehashed numerous times. If you're that interested, please just read some of the topics.
I don't want to **** anybody here, but... Houses in my area sell for about 1M. Agent commission is 3%. What are they doing that worth 30,000$, a yearly salary of a lot of people? Showing the house? Making some phone calls to mortgage/escrow/owner/buyer? Send template docs with entered details for docusign?
30,000???
Sounds like a good gig. You should quit your job and give it a shot.
I know there is open hostility between the buyer's and seller's agent but they are both incentivized to get that deal done and they are incentivized the same way. Neither gets paid if it doesn't work. Sure the listing agent can find a new buyer and the buyer's agent can take the buyer to a different house but your job is to close deals or you don't have a job. In any collaborative selling arrangement you will have disputes. This does not mean that the roles are fundamentally adversarial. Yes, competitors in all businesses sometimes collaborate as partners but within those initiatives, they agree to collaborate and they carefully define the bounds of collaboration. Anyway, it's simply not possible to have business relationships that are both fundamentally collaborative and fundamentally adversarial at the same time and nobody in their right mind would try to define a business relationship as such. That's a law of nature. If their incentives are aligned, they will act collaboratively to solve issues that stand in the way of their mutual interest, even if they shout at each other in the process. If that damn water softener is important to your client and it might scupper the deal or delay things, your job is to be on the phone with the seller's agent and get it done or see if it's really that big an issue or solve it some other way. Just as if a car sale close was being held up by the service area. You bet the sales guy would be on the phone to get it sorted.
Your obvious bias is making it difficult for you to let go and understand how this actually works and it's NOT car sales.
Yes, both agents have a goal of getting a deal closed. The seller's agent's interest is in getting their seller a deal closed that meets the seller's needs. The buyer's agent's interest is in getting their buyer the home they want at the best possible price. Reality says that there will need to be compromise on both parts, and the agents' job is to keep emotion out of the deal and to get the best possible compromise for their own client. That requires both working together to figure out what will work best to accomplish that for both parties and being willing to stand strong for one's own client's interests when that is necessary (not all agents or clients being equal).
What you keep forgetting is that for real estate agents, it is never about the one deal. It is a business that is very much referral driven, and when working for a buyer client, the buyer's agent knows that if they do an excellent job for their BUYER, that buyer may very well turn into a seller/buyer down the road AND is likely to tell their friends who are looking to buy or sell about their great agent. That doesn't work with the attitude that you are deciding MUST be the way it works in real estate. Perhaps you are projecting what you would do onto others with more experience in what works and what attitude guarantees that an agent is one of the majority that don't make it in the business more than a year.
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